CoinSwitch: Taking the FUD Out of Crypto

Introduction

Dewi Fabbri: Hello and welcome to Moonshot – a show by Sequoia India and Southeast Asia that profiles innovative startups and inspiring founders who are dreaming big, making an impact and driving change across the region. I’m your host, Dewi Fabbri and throughout this podcast, we’ll be introducing you to founders and thought leaders who are helping shape the region’s startup ecosystem. We hope this podcast will give you fresh ideas on how to start and scale an enduring company.

Cryptocurrencies now represent the fourth most popular type of investment among investors behind only stocks, mutual funds and bonds. The overall crypto market cap now hovers around a trillion dollars. In 2017, Ashish Singhal, Vimal Sagar Tiwari and Govind Soni founded CoinSwitch, one of India’s largest crypto trading platforms. Their initial product, though, was a metasearch layer that converted one type of token to another. On this episode of Moonshot, we chat with CoinSwitch Co-Founder & CEO, Ashish Singhal and Sequoia India’s Managing Director, Shailesh Lakhani about how the platform pivoted and grew in just five short years and how the CoinSwitch team is navigating the current downturn.

Ashish, Shailesh, thank you both so much for joining us today.

So, Ashish from what I understand from Shailesh you met at a Sequoia hackathon in 2015 can you tell us about the beginning of CoinSwitch

Start by solving a problem that you’ve encountered

Ashish Singhal: Back in 2015, we obviously met through a Sequoia hackathon. We were building a different thing altogether. In that time, I always wanted to create a crypto company because when I read the Bitcoin white paper in 2013, 2014, I got really fascinated by how Bitcoin created blockchain, which could really change the way financial ecosystems work. In 2015 as well, I wanted to do a hack on crypto and build a crypto company but Bitcoin crashed at that time, almost 10x. And everyone that I knew told me, “This was a bad thing to get into”. Finally, I got the courage to start a company in 2017 by solving a very simple problem. The price of a cryptocurrency used to vary across exchanges because it’s simply based on demand and supply. And, three of us were hackers, so we built a hack for ourselves to get the best price of crypto at any given point in time by aggregating all the data from these exchanges. And we thought, “Oh, we are trading the best at the best rates, maybe others want it too”. And we made that hack public back in 2017 and realized the potential of it. Within a month, we were doing a million dollars GMV (gross merchandise value) a day, with thousands of thousands of users around the globe using our product to look at the best crypto prices and trade at the best prices.

Dewi Fabbri: So, two things there. So you were really profitable almost from Day One – but before you built that, you built a metasearch layer, right? What prompted that pivot? 

Ashish Singhal: So, back in 2017, since we started as an aggregator, that was a metasearch platform. We were profitable because to be honest, we didn’t have any expenses. We were kind of built like a Google. People would come in, search the best rates, convert crypto, and we get the commission from that. [We had] a very small team focused on solving and making crypto much simpler and easier. We couldn’t operate in India because [in] 2018 is when the RBI (Reserve Bank of India) ban came in and we had to shift our focus to building a global company. But, what made us pivot and focus on India was that in 2020, the RBI ban got reverted by the Supreme Court, which gave us the opportunity to innovate in India, which we always wanted to do.

We wanted to simplify crypto for retail users in India. People like my parents, who could get into crypto through the application, through the simplicity that we could provide them. And 2020 was that opportunity for us, which we made the best out of.

Dewi Fabbri: Shailesh, tell us about that first meeting, when you met at that hackathon. Why did you choose to partner with CoinSwitch? 

Shailesh Lakhani: So, we had met Ashish for the first time in 2015 when they won our hackathon, and they had an idea that was quite far away from crypto but they were obviously very smart folks, and there were a bunch of great teams that year. And so, we got to know them a little bit then. But it was really later in 2017 when they started CoinSwitch, when we spent more time together and focused on the idea of CoinSwitch.

It was a relatively easy investment decision. They were a company that was making money. They were profitable literally from Day One. They were satisfying user needs around the world, and they understood the problem very well. They had been in that business as users, and they were solving their own problem. So, it was actually a really easy decision for us to do. They were also navigating what was then a pretty interesting time in India, regulation around crypto – that crypto was being shut down. And so, they were a global product. It was something that could serve users around the world. And, we felt that they were amongst the best teams in the world to be building this.

Ashish Singhal: I still remember the day Shailesh called me when the RBI ban came along, [asking] “What do you want to do?” I said, “Nothing impacts us, we are a global product, we’ll build globally”.

Dewi Fabbri: So it was really an easy decision, almost. 

Shailesh Lakhani: Yeah –  you always remember where you were when you made the final decision, and we were at a Sequoia offsite in Hong Kong and there we had the final discussion amongst a team. One of our younger analysts Rishabh, at that time, was closely working with Ashish Agrawal and we had the final conversation then, and we decided to make the investment. And that was at that point where crypto was really crashing. The markets were dropping a lot, but yeah, these guys were very smart. They were working very hard and they had seemed to figure out a model that made sense. So, it was something that we felt was worth backing for the long term.

If mom can use it: The CoinSwitch differentiator

Dewi Fabbri: What was your ‘aha’ moment, Ashish?

Ashish Singhal: I think I’ll focus on the one thing that kind of changed the trajectory. Although there were many ‘aha’ moments, but I think one that stands out is, you know, we wanted to build something in India which could simplify crypto investments. Crypto investments, before us, were very complex. You have to go to an exchange and send complicated graphs and order books to get into crypto. People who are used to ordering food with a single click or booking a cab with a single click were forced to have these horrible experiences; and that’s what we wanted to simplify. And simplicity is very subjective, it’s not objective. You can’t say one thing is simple, one thing is hard. So our definition of simplicity was that the day our parents buy crypto is the day that we think that we have made our product simple enough. And after the launch of CoinSwitch on the 1st of June 2020 in India, within the first seven days, my mom did the KYC (Know Your Customer), understood how to use a UPI (Unified Payments Interface) and bought her first Bitcoin. I think that was the day that we knew that we had something on our hands which is remarkable.

Shailesh Lakhani: And this was six or seven years after you had been into crypto? 

Ashish Singhal: Almost seven years, yes.

Dewi Fabbri: That must have been a very profound moment in your life, right?

Ashish Singhal: So, that was the goal that we started with, and it felt like we had met that goal. And in an entrepreneur’s life, when you are always chasing the next target, these moments are very few, right? And getting that satisfaction that day, told me that we have very far to go but we have achieved something here.

Shailesh Lakhani: Yeah, so I remember when we were running the global product that was trading cryptocurrencies, although it was doing quite well, like we got to a few million dollars in revenue, it was always profitable, it was something that after a while became a little bit of a slog. There were a bunch of competitors and it was harder to differentiate. But when we launched the India product, as Ashish was saying, we saw an immediate level of product market-fit. The targets that existed for the first 30 days, they met in the first few days. The customer reception and response to it, it was like the perfect product at that time. And the simplicity of it was something – as Ashish says – was just something that India had never seen before. So, at that point in time, it was very clear what the company needed to do, and I think almost immediately, all resources shifted towards that.

Dewi Fabbri: What do you think was behind this popularity? Like, it just took off so quickly. What drove it? 

Ashish Singhal: I think we did a lot of things which now in hindsight seems good… But I think one thing that stood out was the simplicity. We were not building, we were not copying product from outside and showing it in India. We were trying to solve the problem of India itself. And we feel that the product that we would use, is the product that we want to showcase to our users. So that was a completely new interface altogether, on how crypto can be bought so easily, like booking a cab or ordering food on Swiggy. So, I think that made all the difference. I still remember, our target for the first six months was 100,000 users. We ended up with one and a half million in the first six months, organic users. So yeah, so we knew that we had something amazing on our hands.

Build user confidence: Educate them on how to use your product

Dewi Fabbri: And, what are some of these outreach efforts, to convert people? I know you did an advertisement with the Indian Premier League (IPL). Tell us about that. You spoke earlier about simplicity being objective, but keeping your product simple was one thing but you really wanted to bring it to the masses. How did you do that? 

Ashish Singhal: So I think before us, a lot of crypto companies were afraid to go out in public, right? Crypto was done in India, a lot of users were in India, but all of this has not been in the limelight. And we said that now we have the app, which is built for the entirety of India, not just the metro cities in India, we will go out on platforms and say, “We are a crypto platform and we exist”. And that was our first IPL campaign. We were the first crypto company to ever go out on such a big media platform and talk about crypto. And the message that we gave out was, “It’s okay to ask questions about crypto”. And that kind of became viral and helped us grow to where we are today. We wanted to break the clutter. You see a lot of ads, a lot of companies were raising funds, becoming unicorns and were advertising, and we wanted to break that clutter of ads. And crypto is about education – a lot of Indians didn’t know what crypto was, how it is useful, how to read about it, or how to learn about it. And that’s where we did a very clutter-breaking ad in ET (Economic Times), where we gave a crossword puzzle. Helping users solve that crossword puzzle will force them to learn about crypto and after solving it, we gave them an option to come to our app and then invest in crypto. So, that is the whole fundamental of crypto –  do your research before you invest into crypto. And, that was the fundamental of that ad as well.

Dewi Fabbri: That’s super interesting. So, do you do any sessions where you do educational sessions or videos? Do you do any of that?

Ashish Singhal: So, our media team is probably bigger than any newspaper in India as well at this point, because we create amazing crypto content. Crypto is about learning. It’s a new technology altogether, and learning and creating content is the key aspect of any company in the crypto space. I’ve always said that we started as a crypto company. Now we have to become an EdTech company, to finally become a FinTech company in the making. So, today we are in that phase of creating, becoming an EdTech company. Our YouTube subscriber base is one of the highest in India in the crypto space and hopefully, soon in the FinTech space as well. We create amazing InShorts type articles to read about crypto, digest crypto very easily; amazing quality blog posts, understanding and breaking down the jargon of crypto to the retail users of India. 

Dewi Fabbri: That’s amazing. So it’s really about educating users or potential users to have the confidence to then use your product.

Ashish Singhal: Yes.

Go-to-Market strategy: Web3 vs Web2

Dewi Fabbri: Shailesh, let’s talk about GTM (Go-to-Market) for Web3. How is it different from building products or services for Web2?

Shailesh Lakhani: So, I think there’s lots of different types of Web3 services and the type of company that Ashish is building with CoinSwitch, is one that’s really focused on investment products. It’s one where you’re introducing a new class of investments to users. And so, as you described, education is a big aspect of it. Making it easy, making it something that people can understand, is a big aspect of it. And also, it’s a lot of mass market communication because that’s really something that almost everyone can buy, and should potentially have as part of their portfolio.

For broader Web3 apps that are distributed applications that many others or many other companies are building, it depends on your users. Your users are probably a smaller segment of users, they could be people who are looking to do decentralized finance type applications, they could be people who are purchasing NFTs (non-fungible tokens), they could be people who want to be a part of clubs or communities. The GTM is very different. But in the end, it’s just really focused on what the user is, and finding where those users are. And those companies, whether they’re building a Web2 application or a decentralized application, should use aspects of that technology that are best suited for the end user. Not all things should be Web3. Not all things should be decentralized and you should figure out what aspects of Web3 or what people really need.

Ashish Singhal: I think one aspect especially in the Web3 companies that comes in, which Shailesh touched upon is, community building. So, Web2 companies are built by founders and then used by users. Web3 companies are built together by users and founders. So users become part of your community and help you build that product together because they have an incentive for that product’s success as well, because they become kind of your early shareholders in a way. So, that’s how Web3 and Web2 companies are different.

Like Shailesh said, you still have to solve the user problem. You still have to build an amazing product. That still remains at the core of it. The only difference is that you can build a community-based product much better in Web3 than in Web2.

Shailesh Lakhani: And, I think finding the right incentives. I think incentives are misused in Web2, Web3, and all sorts of companies in unfortunate ways. People should think about what are the ways that users will sustain and retain and be with you for a long time. But yeah, Web3 certainly gives you the capability for users to have way more say in the early days of a company and a project.

Dewi Fabbri: Yeah, so they play a role in architecting their dream product almost, right? 

Shailesh Lakhani: Yeah.

Bear markets make you work harder for your users

Dewi Fabbri: So Ashish, your industry is one that’s highly volatile. You’ve been through the bear market of 2018, you went through the banning of cryptocurrencies by the Indian central bank and now the latest crypto rout. Tell us how these instances shaped you as a founder. Have you learned anything from it?

Ashish Singhal: So, I think as a founder, and most first-time founders, try to find that growth hack. This word is very overused across startups. They feel like there would be a switch that would be turned on one day and everything would change. And, they just have to find this hack somewhere. What I’ve learned through my journeys across these various challenges is that there is no switch. You have to continuously work for your users, solve their problems, and it’s an incremental growth. You probably will not see your growth in one day or two days. But when you look back for several weeks of working hard and solving a user’s problem, you’ll see that incremental growth in your journey. 

So, solving your user’s problem is even more important in a market which is going down because in a down market, you have to work much harder. And have that patience, have that frugality built into the ecosystem of your company to solve the right problems for your users.

Dewi Fabbri: Can you give us an example of that? Like, what’s one thing that you’re looking at and reworking and iterating? 

Ashish Singhal: Sure. So I think for us, we want to be; we want to make money equal for everyone in India, and that’s our mission. So, what we want to do is, to see how people make investment decisions. How are they selling on profit? How are they selling on loss?

And, we want to increase the percentage of people who want to; who are making profits in this industry, and then figure out what are the decisions that they are taking, how they’re taking those decisions, and democratize that. Helping other users by informing [them on] how to make investment decisions, how to make better investment decisions every single day, not just in crypto, but across asset classes as well. 

So, that is how our company shaped up, because the metric that we chase is not the number of trades or money invested into the ecosystem, but also the amount of gains our users are making every single day. And, making that metric go up is the real challenge – and figuring that out in a down market is very critical for making sure that they’re taking the right steps in their investment journey. 

Dewi Fabbri: So you, actually track the gains that users are making? Do you want to explain a little bit about that?

Track user gains to improve your product

Ashish Singhal: Sure. So, basically today, 73 percent of our users on our platform make gains whenever they sell any asset that they’re holding on our platform.

We look back on – when did they make that decision, how did they come up to that point in making that decision. Today, every retail user wants to invest, wants to grow their money. But the problem that lies ahead is that they’re not fund managers. They don’t have the right education to know when to invest, how to invest, and what are the parameters to look for, right? And that is what we try to simplify and see whether users are understanding when to invest, how to invest, and in which asset to invest. How to even judge an asset class altogether, and see whether after learning that, their investment decisions are changing, or are evolving over time, and helping them improve this metric of 73 percent to probably 90-plus percent is what we are trying to chase.

Dewi Fabbri: So you’re seeing a direct correlation between these educational outreach efforts and people trading.

Ashish Singhal: Yes, and obviously the market plays a role which deters all our metrics in a way. But the idea is that in the long run, the market would even out, and these decisions that you’re making would actually stay with you and help you make better returns in the market.

Dewi Fabbri: So, based on everything that you’re doing at CoinSwitch, it looks like there’s a lot that the team is working on. What are you going to expand on going forward?

Ashish Singhal: So, our mission to ‘make money equal for all’ means that we have to be a much broader company, a multi-asset company, helping people invest – not just in crypto, but in any asset class. And, where this motivation comes from is very personal. Growing up, we’ve all been in this situation where we didn’t have money to pay for our school fees, pay for our college fees. And, I wouldn’t be sitting here if somebody didn’t help me or my parents at that time. The idea is that for a typical Indian, growing money means earning more, working harder. What we want to introduce is that you can grow money by earning more, but you can also grow money by investing correctly, right? And, that’s the habit we want to build in India. And, that is what the mission is about – helping users invest in India. And, hopefully 100 million users, in the next four years, will be helped by us to invest in India. Not just in crypto, but any asset class – be it stocks, be it mutual funds, be it bonds, gold or crypto. And, how to make those investment decisions better every day. Like the options which an HNI (high-net-worth individual) has in India, we want to make sure that every retail user in India has those same options available.

Be frugal, be focused

Dewi Fabbri: That’s amazing, and almost a very noble mission. So, what advice would you give someone building a cryptocurrency company today?

Ashish Singhal: I think, [in the] market, there is a lot of negative news or positive news, and these are cycles which will continue to be. Don’t get distracted by it. Focus on your users, focus on the problem that you are solving, the problem of your users, and keep on solving them day by day. Be frugal and be focused. It’ll take a lot of time. There is no flip of a button, which would change your destiny altogether. It’ll take a lot of hard work. So, be patient and focus on your user’s problem. I think there is nothing else that would build your company better. 

Dewi Fabbri: Perfect. Shailesh, you’ve worked very closely with Ashish and his team. What advice would you give to a crypto founder – having worked with Ashish and other crypto founders as well?

Shailesh Lakhani: Yeah, firstly, I think we’re entering a wonderful period to build. The last few years, there was lots more funding and lots more noise and many, many more startups. [It] creates a very difficult environment to build. There’s too much noise. And now, we’re entering a period where people who are really focused on using this technology in a productive way that focuses on users, focuses on the specific problems, as Ashish said, can really come to the forefront. So, we’re really excited about the period that’s coming up ahead. And for founders, they should pick the right technologies to solve the right problems.

Crypto solves, and blockchain solves lots of interesting problems, but it doesn’t solve everything. And the technology’s also not very mature. There’s tons of things that remain to be built on the infrastructure layer. And, there’s wonderful opportunities to build companies in infrastructure, so people working on that should absolutely focus on that. But, if you’re looking to build something that’s completely mass market and can probably serve a billion users, you may not be able to do that in crypto just yet today. And, there’s probably specific classes of users or specific types of things that you should solve. We’ll be coming out with some more content on this, but we have some ideas of what are the best applications for crypto, and that’s what we think that crypto is best suited for in the next few years. So, yeah, Ashish and the CoinSwitch team have always been among the most hardworking folks we’ve ever met. They were working out of our co-working space for a couple of years, and we used to see them in the office, literally every single day, every weekend, they were always there. So, without hard work, there’s really nothing that you can do.

Secondly, while they were very focused on their core problem of working on just swapping cryptocurrencies, they always had an eye and experimentive sense that they were always trying many different things on the side, and they were quick to kill. So, I remember there were a bunch of experiments they tried over the years, and some of those had some level of success, some didn’t, but they were always open to trying what was a really big opportunity. And then, they finally discovered that with the Indian retail product. 

Know that there’s a right time for your idea

Dewi Fabbri: So, this whole idea of being quick to kill something, right? That’s easier said than done. Sometimes you get so attached to something, either a product or a feature. How do you work through that, Ashish? 

Ashish Singhal: It might sound repetitive, but listen to your users. Ultimately, users will tell you whether a product is working or not. And, you can iterate on the feedback and try to improve upon it; but some products are solving good problems for the users, but the number of users it is solving for is still very limited. So, you have to understand that very carefully, and very early. Even if a perfect product serves a hundred people, you have to make a call whether that is good enough for you, or you want to solve, say, a hundred million user problems altogether – take those calls.

And these calls, you can repeat them again, right? Maybe the time is not right today. Kill them, but have it on the back of your mind that, “I will try this when this particular instance or this particular data changes”. Know why you’re killing it. What data point is impacting the killing of that feature, and what data should change to retry that again. So, ideas are not bad in my opinion. Ideas have the right time for it.

Dewi Fabbri: So, it’s really about looking at your list, being ruthless, culling them, but then revisiting them when the time is right. Are there any tips for aspiring founders? Like, what do you do? How do you work through that? Do you have a workflow? Do you have a doc? I don’t know, how do you go through your ideas on what to kill and what to keep, and what to bring back from the dead, almost?

Ashish Singhal: So, I think I have a note where I keep on writing every idea. Even in my notes today, there are a couple of moonshot ideas that are written. The best way to test them, in my opinion, is to do a quick prototype, go to the users and learn from them. A lot of things that we presume are right for the users, or should happen this way, are proven wrong when they actually go in the user’s hands. So, the earlier that you go to your users and collect that feedback, the easier [it is] for you to take those chances or make those decisions. So, that’s what I personally do, try to quickly create a mockup in a couple of days and go to the users. Now I have a big team, so I can go to that team as well and let them try out the product and see their feedback. 

Dewi Fabbri: And, do you have a timeframe that you trial a product for? 

Ashish Singhal: Typically, yes, because big products obviously need a bigger timeframe, but usually within a week or two, you get a basic sense of where the product is going from the prototype stage.

What are the flaws in that? Do you want to work on the flaws or the idea itself is flawed at this point, right? So you get a fair sense. The timeline obviously varies based on idea to idea, but if you know, founders are being honest with themselves, these data points are available. Sometimes founders try to make sure that, “This idea is good. This is my idea. This cannot fail”, and they spend more time with it. I think if you detach yourself from the idea and see it from the user’s lens, it becomes easier to kill ideas as well.

So Shailesh, one thing that I personally would want to know from you is when founders are working on an idea, focus is the key. But, they also need to have an experimental mind to keep on trying new things as well. How do we keep that balance? How do we make sure that, you know, we are focused on one thing that we are solving, but also keeping an eye out on what is happening in the industry, and still trying those experiments here and there?

Shailesh Lakhani: Yeah, I think that’s a great question, and it’s very difficult to do in practice, but it’s a little bit of; you know, 80 percent of your time you should be focused really on your core and really spend most of your efforts to try to make that work. And, most of the team should be dedicated towards that. But as you have some resources, and in your spare time, to keep very much more than an eye out on what’s happening around you. I think sometimes adjacencies that exist around a core product could be far easier to address, and could scale much faster than your core product.

Look, it’s a really difficult thing to do, to really focus on something while still having some perspective on other things. But you have to do that. I think, like you described, that you know there are conditions that make things work, and sometimes the conditions around your core product may not be that great; and there might be something else that you can do that is far easier.

I remember one part of your journey where you had built a piece of technology, which helped you price cryptocurrencies in a volatile market, in a way for users that let them lock in the price. When they initially saw the price, they could trade against that price for a few minutes. And while that was useful for one part of your business, it actually became much more useful in another application for retail users in a much better way. So, it’s often parts of your tech that, if you think through, could actually have much better application in other parts of the business. So yeah, I think people should always test the conditions around them.

Ashish Singhal: Sure.

Give yourself two chances at success

Dewi Fabbri: You know, you were talking about building out a specific part that might not necessarily be key to your main product, but then noticing that it scales faster. Is that then a sign to pivot your product to then do the new [thing]?

Shailesh Lakhani: Yeah, you know, I think one of our US partners, Alfred, kind of says this in an interesting way, “So, if you have a choice of what to do, you should do both”. Sometimes, you just don’t know what will work and you give yourself as many chances as possible. And, you test those and some of those things that might work way better in a particular direction. So, everything in a startup is context-dependent. It’s dependent on the context around you. It’s dependent on what situation you’re in, how many resources you have, how much runway you have, how your team is structured. And if you can give yourself two chances at success, that’s always better than having just one.

Ashish Singhal: And, I may disagree and still agree with Shailesh. And sometimes it’s also saying, “This is the path that I want to take”. And so, like in our case, we killed a profitable business. And I know there were a lot of questions like, “Why are you killing a profitable business and going all over India”; because we saw the opportunity, that in India we could be much, much bigger if we solved the problem correctly. And we took that chance. So, sometimes it’s also about taking a chance as well. Obviously, both options are available to you. It’s amazing. But sometimes that focus needs to come back, and your commitment to the idea matters as well. So sometimes, you do have to take those hard calls. 

Dewi Fabbri: Ashish and Shailesh, thank you both so much for joining us today and sharing CoinSwitch’s stories, and your insights behind building this company. I’m Dewi Fabbri, and you’ve been listening to Moonshot. For more interesting startup stories, visit our website, siteadmin.peakxv.com, or follow us on your favorite podcast channel.